Brown Bailout

Federal Express has always been more than generous with its employees. So much so that unions have trouble finding disgruntled workers to unionize. But if a stealth change in the law makes its way through Congress, the unions may be able to get a foothold; thereby gaining immense power to do damage to the overnight shipping industry, imperil business operations across the country, and benefit UPS. From Brown Bailout:

Congress Should Not Change How FedEx Express is Regulated

An overwhelming number of Americans are fed up with special interest legislation designed to benefit corporate America, according to a new public opinion survey.

When asked, most of those polled agreed that it is inappropriate for companies to quietly place lobbyist-written provisions in legislation that benefit only their company. Eighty-eight percent said this practice is unfair and more than nine out of 10 respondents said the practice of “slipping language in laws and hoping no one notices” should be discontinued by Congress. Unfortunately, a special interest provision is holding up FAA Reauthorization, legislation that is vital to passenger safety, investment in space-based navigational technology and airport improvements.

The House version of the FAA Reauthorization bill includes a 230-word amendment, drafted by UPS lobbyists, that would change the labor laws that regulate FedEx Express (the Senate version does not). There was no public debate on the UPS provision, which is, in effect, a bailout to rescue UPS from competition in the marketplace. The UPS provision is aimed solely at undermining the reliability of FedEx Express’ time-sensitive package delivery that thousands of businesses worldwide have come to count on. And that is something Americans do not support.

What it is is: Since it began its overnight delivery service in 1971, FedEx has operated under the Railway Labor Act. That statute was designed to prevent or discourage major interruptions, such as labor strikes, in interstate commerce. Airlines and express-shipping companies handle time-sensitive materials vital to our economy and health care – such as emergency medical supplies, critical replacement parts for manufacturers’ factories and essential inventory stock — that its customers need ASAP. About 85 percent of FedEx parcels travel by air, so the classification makes sense. Its business model differs substantially from UPS.

The RLA allows unions to organize but it must be done on a national, not local, level. FedEx’s 125,000 employees include 4,500 who belong to the Air Line Pilots Association; the others are non-union and have rejected attempts by the Teamsters to organize them. FedEx brags that all of its work force is well-paid with competitive benefits.

UPS, twice the size of FedEx, delivers about 85 percent of its packages by trucks. Most parcels are not overnight delivery. Its 240,000 Teamsters-member employees can conduct local strikes under NLRB’s rules. And UPS has been more prone to labor problems and shutdowns. In 1997, for example, a 15-day Teamsters strike at UPS cost the national economy an estimated $15 billion.

If FedEx was under NLRB regulation, a handful of employees could shut down service at airports, including the Cedar Rapids facility, which handles 36,000-plus tons of airfreight annually.